Park-Ohio Holdings Corp. (NASDAQ:PKOH) Q4 2024 Earnings Call Transcript

Park-Ohio Holdings Corp. (NASDAQ:PKOH) Q4 2024 Earnings Call Transcript March 6, 2025

Operator: Greetings, and welcome to the Park-Ohio Holdings Corp. Fourth Quarter and Full Year 2024 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to your CFO, Vice President, Pat Fogarty. Please go ahead.

Matthew V. Crawford: Kevin, actually, it’s Matt Crawford who is going to start. Thank you for the introduction, and thank all of you for joining us on our fourth quarter and year-end 2024 conference call. We are proud of our 2024 results and the momentum we gained in three areas of strategic value. First, improved and record levels of gross margin. Second, while short of our internal goals, solid cash flow performance, and finally improving leverage metrics and liquidity. We achieved these goals through strong execution by our management team, but also through the ongoing reshaping of our business portfolio. Over the last several years, we’ve worked to exit businesses which we do not find meet our long-term goals and focus more attention and capital on our best brands, customers, products, and services.

We have completed this effort while still maintaining record or near-record revenue across the company. Our vision here is to build a diverse set of complementary industrial businesses which have important and lasting competitive moats and demonstrate above-average growth characteristics. The businesses we are focused on demonstrate varying strengths, including strong, global brand recognition, excellent economies of scale and data management, intellectually protected products, and a good balance of aftermarket exposure. In addition, we have created a less asset-intensive model which should lower our capital expense through the business cycle and free up opportunities to invest in those items which will lower our cost to serve and increase our overall competitiveness and margin profile.

Additionally, these investments should be the bedrock of a model focused on organic growth complemented by some acquisitions through the business cycle. Thank you to all of our Park-Ohio associates globally. Our team has never been stronger. Thank you. Now I’ll turn it over to Pat to cover the numbers.

Pat Fogarty: Thanks, Matt, and good morning. Overall, we are pleased with our 2024 fourth quarter and full-year results, which exceeded our expectations in many financial categories, including gross margins, operating income margins, earnings per share, EBITDA as defined, and net debt leverage. Also, our supply chain management, proprietary fastener manufacturing, and industrial equipment businesses achieved all-time highs in terms of sales and profitability. Before I comment on our guidance for 2025, I’ll review our full year and fourth quarter results in detail. Consolidated net sales in 2024 were approximately $1.7 billion, consistent with 2023 record revenues. Two out of our three business segments experienced year-over-year sales growth, which was driven by several end markets and a broad range of customers.

Q&A Session

Our supply chain management business achieved record sales during the year despite demand volatility in several end markets. Year-over-year growth occurred primarily in aerospace and defense, heavy-duty truck, consumer electronics, and electrical distribution markets, offset by weaker demand from power sports, industrial and agricultural equipment, and lawn and garden markets. In our proprietary fastener manufacturing business, full-year sales were at record levels as increased demand relating to new applications utilizing our proprietary self-piercing and clinch products contributed to the greater than 10% growth year-over-year in this business. The sales growth in our Engineered Products segment was in line with our expectations considering the strong new equipment backlogs at the end of 2023 and new equipment bookings throughout the year.

The booking trends continue to be robust throughout the year in both North America and Europe, and in all major induction heating and melting brands. In our Assembly Components segment, full-year sales declined 7% year-over-year, which was a result of lower unit volumes on auto platforms currently in production and end-of-life programs and lower pricing on certain fuel products. Replacement sales on the programs that ended during 2024 launched in the second half of the year and were not at full volume production rates. This also affected our 2024 sales in this segment. Our GAAP earnings per share from continuing operations increased 18% to $3.19 per diluted share compared to $2.72 last year. Adjusted earnings per share, which excludes one-time non-recurring items, improved to $3.59 a share compared to $3.07 per share in 2023, an increase of 17% year-over-year.

Full-year gross margins in 2024 improved 60 basis points to 17% of net sales. The gross margin improvement was most evident in our Supply Technologies segment, resulting from lower product costs, favorable sales mix, and improved absorption in many locations throughout North America and Europe. Gross margin improvement continues to be a key initiative and we expect continued improvement in the current year. SG&A expenses were higher in 2024, primarily due to the impact of the higher employee-related costs and general inflationary increases. As a percentage of net sales, SG&A was 11.3% of sales compared to 10.9% of sales in 2023. Our adjusted operating income was $94 million compared to $90 million a year ago, an increase of 4% year-over-year.

Record operating profit margins in our Supply Technologies segment and in our Industrial equipment business accounted for the increase year-over-year. Interest expense was $47 million compared to $45 million in 2023. The increase was primarily due to higher interest rates. Our full-year income tax expense was $4.9 million and pretax income of $44.4 million representing an effective income tax rate of 11%. Our effective global tax rate benefited from the recognition of research and development tax credits.

Pat Fogarty: The reversal of certain tax valuation allowances during the year. We expect a more normalized tax rate in 2025 ranging from 21% to 23%. Our EBITDA as defined was $152 million in 2024 and 13% compared to $134 million in 2023. Operating cash flow generated during the year was $35 million and free cash flow was $15 million. Additionally, we sold approximately one million shares of common stock for $30 million and used the proceeds to pay down debt. As a result of our improved EBITDA and lower debt levels at year-end, our net debt leverage improved to 3.8 times. Moving now to our fourth quarter results. Net sales from continuing operations of $388 million were consistent with 2023 fourth quarter revenue. Quarterly revenues in our supply technologies and engineered products segments increased 2% year-over-year.

Revenues in our assembly components segment declined in the fourth quarter due to customer plant shutdown schedules during the month of December, which affected several of our plants in this segment. GAAP earnings per share for the quarter were $0.41 per diluted share, which is affected by the impact of one-time non-recurring items totaling $5 million relating to facility exit costs, litigation expenses relating to a 2016 dispute in our assembly components segment, and gains on sale of assets. Our adjusted earnings per share of $0.67 in the quarter compared to $0.54 in the quarter last year, an increase of 24%.

Matthew V. Crawford: In the quarter, adjusted operating income totaled $19.4 million compared

Pat Fogarty: to $17.7 million in the 2023 quarter, and margins improved 45 basis points compared to 2023. We generated significant operating cash flows of $26 million and free cash flow of $29 million and EBITDA as defined increased 27% to $37 million in the quarter. Turning now to our segment results. In Supply Technologies, net sales for the full year were a record $779 million, up 2% compared to $766 million in 2023. The increase was driven by higher customer demand across certain key end markets and our supply chain business with the biggest increases in aerospace and defense, heavy-duty truck, consumer electronics, and electrical distribution, which was offset by softer year-over-year demand in the power sports, industrial and agricultural equipment, and lawn and garden end markets.

During the year, we continued to see strong demand from commercial and military aerospace customers, which was up 21% over the prior year. Sales in this segment were also favorably impacted by increased demand for our proprietary fastener products as sales in that part of the segment were up 11% year-over-year. Operating income in this segment achieved an all-time high and totaled $75 million in 2024, up 27% compared to $59 million in the prior year. And operating margins were 200 basis points higher at 9.7%. These increases were driven by the higher sales levels, favorable mix of higher margin products, and the impact of profit improvement initiatives. In the fourth quarter, net sales were up 2% to $182 million compared to $176 million in the fourth quarter of 2023.

Adjusted operating income totaled $16 million compared to $14 million in the prior quarter, an increase of 14%. The fourth quarter results were a strong end to an outstanding year’s performance by this segment of our business. In our Assembly Components segment, sales were $399 million for the year, down 7% compared to $428 million in 2023, resulting from lower unit sales caused by lower OEM production, lower pricing on certain programs, and end-of-life programs. Adjusted operating income was $26.5 million in 2024, compared to $34.9 million in 2023. In the fourth quarter, net sales of $90 million were down 7% compared to $97 million in the fourth quarter of last year. And adjusted operating income totaled $4.5 million compared to $6.5 million in the fourth quarter of 2023.

Our fourth quarter sales levels were affected by OEM plant shutdown schedules which exceeded holiday scheduling in the prior year. In our Engineered Products segment, full-year net sales were a record $482 million, up 3% compared to $469 million in 2023. Driven by strong customer demand in our industrial equipment business. New equipment bookings for the full year were $164 million and new equipment backlog as of December 31st totaled $145 million. Record revenues in this business grew 6% with significant growth in sales of aftermarket parts and services, which grew 12% year-over-year. In our forged and machine products business, full-year sales decreased 4% driven by lower rail forging sales, which more than offset strong demand for aerospace forgings in our Canton, Ohio facility.

We continue to quote new projects in support of the defense industry, including aerospace forging products and new equipment builds. Excluding special charges, our adjusted operating income for the year was $21.3 million compared to $24 million a year ago in this segment. Lower operating income levels are driven by a year-over-year significantly affected margins in this segment.

Matthew V. Crawford: We have implemented operational improvements in our plant in Arkansas

Pat Fogarty: and expect the benefits to be realized throughout 2025. In the fourth quarter, net sales were $117 million, increased slightly over sales of $115 million in the 2023 quarter, and adjusted operating income was $5 million in the quarter compared to $3.8 million. Despite the improvement in adjusted operating income, we continue to make operational changes to certain plants to improve future performance, most notably in our forging business. And finally, corporate expenses were $29 million in 2024, compared to $28 million in 2023, with the increase driven primarily by higher employee-related costs. Now I’ll make a few comments relating to our guidance for 2025. As indicated in our press release, we expect revenue growth driven by stable demand in most end markets, compared to 2024 demand levels.

We also expect year-over-year improvement in adjusted operating income, adjusted net income, EBITDA as defined, and free cash flow. In addition, fully diluted shares outstanding will approximate 14.7 million shares versus 13.2 million shares in 2024, and we expect an effective tax rate of 21% to 23% compared to 11% in 2024. As a result of recent actions with respect to tariffs on goods manufactured abroad, costs for certain goods which we import into the United States, including certain raw materials and components, are expected to increase. We are working with our supply chains and customers to mitigate the impact of such tariffs. Conversely, our United States manufacturing plants may realize a benefit from tariffs as a result of higher production and localized sourcing back into the US.

I’ll turn the call back over to Matt.

Matthew V. Crawford: Great. Thank you, Pat. I will now open the floor for questions. Thank you. And I’ll be conducting a question and answer session. One moment please, while we pull up for questions. Our first question is coming from Dave Storms from Stonate. Your line is now live. Good morning, Dave.

Dave Storms: Just wanted to start with some of the guidance and see kind of what your expectations are for cadence. Should we expect 2025 to be kind of a normal year, or do you think tariffs or anything else might throw that seasonality off?

Matthew V. Crawford: Let me say it, Dave. This is Matt. You know, before Pat answers that, let me comment on tariffs because it took to the first question to talk about them. So let’s just kind of jump in. I think Pat’s last point in his prepared comments is really important. Most of our business, a majority of our business will not be impacted meaningfully or at all by tariffs. Also, our balance of business allows us to have exposure, particularly in the forging group and in the equipment group, which could benefit from these things. In the forge group, we are largely sourced domestically for steel in the US. So that would be tariff-free. In the equipment business, we would benefit from reinvesting in the steel business and in other related businesses and in American manufacturing generally.

As you know, we’ve seen huge backlogs in that business as that investment’s been happening over a series of years in multiple industries. So, you know, we got a lot of bites at the apple in our portfolio to be successful here. And the majority of our, well, 65% to 70% of our business is in North America. Most of it will not be impacted. But we do have some areas. Pat mentioned it, and perhaps you can comment.

Pat Fogarty: Yeah. Yeah. Dave, when you think about our business in the supply technology segment where we source product, you know, all around the world, we do have tariffs that we expect to impact that business as it stands today. We’re working with our supply chains to localize some of that supply, but also working with our customers to be able to pass that cost along to them. So it’s going to take time to work a lot of that out. But, clearly, our belief is that through our ability to work with our supply chains and work with our customers, we will mitigate a large portion of these tariffs as they impact 2025. In our auto segment, you know, the same holds true there. We, as you know, have significant production plants in Mexico that bring product into the states but also ship product in the country.

And so depending on how that plays out and how tariffs impact, we will work with our customers to absorb that cost. And, you know, as it stands today, you know, every day is a new day, and we’re hearing new news by the hour. But right now, we’re, you know, it’s an all-out effort to work with our customers and our supply chains to mitigate these.

Matthew V. Crawford: Dave, I would add one other thing. I think as Pat mentioned, you know, the context of our business plan, this is something we will manage. And we have opportunity as well, as I mentioned. Having said that, you know, this chaos does cause us, our customers, our whole supply chain to be concerned about demand. I mean, this chaos, clearly, we haven’t seen it yet. But I do get concerned that whether there’s inflation or just chaos, it could affect overall demand in 2025 in multiple markets. But we’re certainly not seeing that now.

Dave Storms: Understood. That’s great color. Thank you. As we’re looking into 2025, you know, aerospace and defense has been a real standout for you guys. Recently, you just mentioned the tailwind from the backlogs. Are there any other end markets to highlight or keep an eye on as potential standouts into 2025?

Pat Fogarty: I think you hit on the one end market that we continue to see growth in. When we look into our capital equipment business, Dave, we continue to see strong backlogs. We continue to see booking levels and quoting levels at a high level. So that’s positive for 2025. Within supply technologies, we continue to see, because of the diverse expecting to have increased demand, heavy-duty truck being one of them. But, you know, it’s, you know, when a range of 2% to 4% isn’t largely due to aerospace and defense. There are other end markets that we expect growth in.

Matthew V. Crawford: David, I would also add from a margin perspective, and we can spend a lot of time talking about increasing margins, the big opportunity for 2025 is in our engineered products group. If you look historically, and I know you have, that business is still substantially underperforming despite the strong backlogs. So as we continue, I think, to be effective in turning around those businesses and improving our execution, I think that’s the big opportunity at the margin line.

Dave Storms: That actually ties in real nicely to my next question here. Just on the holiday margins, you know, supply tech has been pretty much buoying consolidated margins. I know your business is set up to take advantage of that diversification. Does 2024 look like a baseline for margins for you with potential sweeter from engineered products, or is there anything else we should maybe keep in mind there?

Matthew V. Crawford: Yeah. I mean, I would say in the aggregate, the opportunity is or the consolidated results, the opportunity is in the engineered products group. We have been so impressed by the leadership of Supply Technologies. Certainly not suggesting that story is over, but those guys have executed at a very high level both on the supply chain side and the specialty fastener manufacturing business. So they’ve done a great job, and they will continue to. But our opportunity is to get the engineered products group back to where it’s been historically.

Pat Fogarty: Couldn’t agree more. I think as we say here, money is made in buying and supply tech had some real success in terms of their product costs during the year, which helped our margins. But the opportunity not only is in our engineered products to improve margins but also in the assembly components area where we continue to implement new value drivers to improve our margins. And, Dave, this will give me a chance to highlight what I said in my opening comments.

Matthew V. Crawford: You know, as we’ve exited some of the forge business and general aluminum, which were high capital cost businesses, we will reallocate that into places like supply technologies where we see opportunities, not just to work a little harder, but to be a little smarter. So you’ll see us investing in technology tools just to be a little smarter, lower our cost to serve, and create a sustainable competitive advantage. So, you know, I think that the story on margin in that group is going to be strategic as well as good execution on buying and so forth.

Dave Storms: That’s great color. Thank you. One more for me if I could. I know you guys had a fairly active 2024 from an M&A side with the divestitures. Just curious as to what you’re seeing in the M&A market with, you know, just the general economic outlook.

Pat Fogarty: Yeah. The volume of deals that we see, Dave, I would say is good and has always been pretty good, but at a pretty level state. I don’t think it’s any more or less than what we’ve seen in the past. We continue to look for strategic type acquisitions that could complement our most profitable businesses. Whether that be in supply technologies or whether that be in our aftermarket parts and services business on the equipment side. So, you know, I think, you know, we’re very careful with where we’re going to bolt on to which companies, and the activity is pretty good right now.

Dave Storms: That’s great. Thank you for taking my questions, and good luck in 2025.

Pat Fogarty: Thanks, Dave. Thank you. Next question is coming from Brian Sponheimer from Gabelli Funder. Your line is now live.

Matthew V. Crawford: Brian, how’s it going?

Brian Sponheimer: Hey, Matt. Hey, Pat. Thank you very much for getting me on here. We were talking a little bit this morning about the release, and then you guys did a great job on the tariff side kind of explaining what some opportunities are. Any questions specifically on fasteners and maybe some exposure there particularly as it relates to China that you might need to work on potentially down the road here? Any comments there?

Pat Fogarty: Yeah. Yeah. Brian, Supply Technologies does import product from China, but it is a small amount. A few years ago when tariffs were first implemented, we localized supply and moved supply out of China to other countries and back into the US. So our exposure there is pretty small. The other products that we may source from Asia would come out of primarily Taiwan. And that’s where we’re obviously working with our customers and our suppliers, including our Taiwanese suppliers, to keep those cost increases to a minimum.

Brian Sponheimer: Okay. Terrific. Thanks for the clarification. And best of luck with this current environment.

Operator: Thanks. Thank you. Next question is coming from Jamie Willam from Willum Management. Your line is now live.

Jamie Willam: Hey, fellas. Few different areas. One, you mentioned that the shares outstanding you expect for next year to be 14.7 versus 13.2. Where did we end the year of 2024 and why the major increase in shares?

Pat Fogarty: Yeah. Jamie, as I mentioned in the script, you know, we sold a million shares through an ATM program. So that took the shares to north of 14.2. It’s a weighted average calculation, the fully diluted shares. So for next year, we’re expecting it to be 14.7. The other increase is a small amount of shares that typically get distributed as part of our restricted stock program within the employee base.

Jamie Willam: Okay. So you’re not expecting to sell any additional shares within that forecast?

Pat Fogarty: Not in this forecast.

Matthew V. Crawford: Jamie, this is Matt. That’s the first time we’ve issued shares, you know, again, like, we’re just trying to show our commitment to deleveraging and positioning ourselves for a refinancing of the bonds and give us a little flexibility. So, you know, we wouldn’t take that off the table permanently. But to be clear, it is, you know, it’s an arrow that we want in our quiver. And I would kind of since you brought it up, I would definitely want to remind everyone that of those million shares, you know, our family not only participated but led that round with about $5 million of investment at thirty bucks. So, you know, we’re very committed.

Jamie Willam: Gotcha. In supply technologies, you mentioned that proprietary products were up 11%. I assume proprietary products have gross margins well above your corporate average. But what are the types of products we are supplying in proprietary products? And what is the outlook for the future on that?

Pat Fogarty: Yeah. Jamie, those proprietary products are included in our fastener manufacturing part of the business. Which when you look at the 10-K, you’ll see what historic revenues have been. But the opportunity there is we have several products that are used in and attached to lightweight materials, which as you know in the automotive front, that is a big initiative to increase or decrease the weight of the vehicle by using lightweight metals. Our products attach to those products, such as battery cradles and different parts of the frame of the car. So a great product has been growing at north of 10% for the last five years. So growing all around the world. We opened up an operation in Germany, we acquired in 2019 a business in Asia. So the product has gained wide acceptance amongst OEMs throughout the world. So we expect that to continue.

Jamie Willam: Okay. So the growth rate in the past could be achieved in the future as well.

Matthew V. Crawford: We fully expect. Yeah. I mean, Jamie, as they convert also in aerospace to different materials, lightweight, other kinds of things you can’t weld to, composites, you know, this kind of technology, which is self-piercing and adheres after insertion is important. These kinds of unique designs are to access areas, not just in auto, although certainly auto has led in the usage of this product. It’s a pretty exciting place to be.

Jamie Willam: Mhmm. On the acquisition front, are you targeting one division more over the other? And what type of EBITDA multiples are you looking to pay?

Matthew V. Crawford: I’ll let Pat handle the EBITDA one. Again, I think that our capital allocation model right now is extremely focused on what I call our best products and services. Now, what we have left in the portfolio are our best products and services. So we would be open to acquiring something strategic, typically smaller, that opens one of our current management teams and businesses perhaps into an adjacent market, an adjacent customer, an adjacent product line, you know, whatever it may be. So email last year is a great example where we found something that was an induction heating business, solid customer, solid backlog, in an important market, Germany, which everyone was down on, but remember, German customers put equipment all around the world.

So that’s been a very good small acquisition for us. I think, you know, so, again, any of our business, I think we’d be open to that kind of one plus one equals three acquisition. Or bolt-on as we call it. Having said that, Pat mentioned earlier, I mean, certainly supply technology is bringing more in our suite of services and products to our customers. Very important, particularly in these chaotic supply chain times. I would also say, you know, on the induction heating side, the aftermarket piece, which again is above-average margins, these are great opportunities for us and probably lead them back. But again, in the business where remaining, we actually did a nice acquisition in the fast manufacturing business we talked about a few minutes ago, two years ago.

So, you know, where we are in our portfolio, these businesses all have opportunities for those kinds of bolt-ons. Of course, we’re going to put the most accretive to the front of the line.

Jamie Willam: Mhmm. And lastly, a bit of commentary. I mean, when you look at your businesses, you’re really tightly controlled and the outlook for sales and margins is kind of wonderful yet. You have no visibility or relatively little on Wall Street. No one knows what a Park-Ohio really is. And, it may be time, you know, you’re doing such a good job of managing the businesses. It may be a great time to introduce the reintroduce the company to Wall Street so they know what a Park-Ohio is, or most people have a name for the company that kind of reflects what their businesses are, not where they’re located and where they put their car. And, you know, I would hope in the future you would think about that and, just so more people in the world can know what you’re doing and how well you’re doing it.

Matthew V. Crawford: Jamie, you’re right. We do think about what you said. We’re very proud of Park-Ohio heritage. It stems back 130, 140 years, part drop forged in Ohio crankshaft, which were incredibly important names historically. In the manufacturing business globally, particularly in for defense and shipbuilding and rails and so forth. So, you know, we sort of constitute that history, but we and we think it says a lot about us but it’s not lost on us that most people don’t know that history. I will say again in terms of really thinking about and any ideas you have offline would be would obviously be helpful. We do think that we have repositioned this business both in terms of how we think about our growth opportunities in our growth strategy and also the businesses that we’re in and why we like them.

So this business was largely built by acquisition. We will still do our share. I think our strategy is much tighter. And so, you know, perhaps your idea is welcome and timely.

Jamie Willam: Done a wonderful job of running these businesses, and look forward to the future.

Matthew V. Crawford: Thanks. Thanks, Jamie.

Operator: Thank you. Next question is coming from Steve Barger from KeyBanc Capital Markets. Your line is now live.

Christian Zyla: Hi, Steve. Good morning. This is actually Christian Zyla for Steve Barger. Thank you guys for taking the questions.

Pat Fogarty: Morning.

Christian Zyla: Good morning. Thank you. So just in the press release commentary, you said you expect year-over-year improvement. Can you just walk us through the specific steps you are taking to drive that sustainable margin expansion? And I heard your previous comments on engineered, but does supply tech still have some juice to squeeze along with assembly?

Pat Fogarty: Yeah. I think and Matt addressed the, you know, the supply tech side of the business. But, you know, if you look at the trends that we’ve established, you know, in our operating income, we continue to implement value drivers at each of the businesses whether that’s focused on vertically integrating rubber mixing, for example, or automation on the plant floor, or initiatives around resourcing raw materials from different suppliers to reduce our costs. So, you know, each business has a number of value drivers that they implement each year. And based on those that we’ve established in our business plans for 2025, we’ll continue to drive operating margins. And that’s across the board. Matt mentioned the real opportunity around engineered products. You know, we’ve had some challenges in our Fortune Machine products business that we believe have been solved. Which will add to the improvement in the operating income margins.

Matthew V. Crawford: Yeah. I don’t want to, I guess we’re not trying to suggest that we don’t think there’s opportunity at supply tech. We just want to say they’ve operated at a very high level. Executed at a high level. Now I think we’re on a journey of some investment to improve the business processes. So we can be better, faster, smarter. And that will show up in the margin, but it won’t show up quarter over quarter. It’ll be, you know, it’ll be a year, if you will, or year and a half or two years. So, I mean, we’re in the middle of that process. And, again, I said some capital freed up. When we let go of some of the forging and casting assets and that’s where it’s going to go, improving the business process at places like supply tech.

Christian Zyla: Great. That’s helpful. I guess that kind of flows into my next question. Just as we got into the middle of 2024, you kind of tempered your sales outlook a couple of times. How much of that was market-driven versus maybe some deliberate plan to walk away from less profitable business? Then through your 2025 outlook, do you think this is a conservative approach or realistic just given the mixed messages in the market right now?

Matthew V. Crawford: You know, that did happen. And, you know, we said on the third quarter call, we expected to grow in the fourth quarter. So a little egg on our face there. I don’t know how to characterize that as walking away from business. I do think, for what it’s worth, at the margin, we almost did grow. The end of the year was kind of wonky in the industrial sector with the holidays and plant shutdowns. Auto is a lower and lower percent of our overall mix, but really the chaos at Stellantis, I think, hurt us a bit relative to our forecast. But I wouldn’t describe any of that as walking away from business. We like our product portfolio right now of customers.

Pat Fogarty: Yeah. I would say, Christian, in the normal course of a year, we’re always challenging low-margin business. Significant occurred in 2024, both our supply tech and our engineered products grew at exactly where we thought they would grow at the beginning of the year, where we saw the decline in sales was primarily in the assembly component segment. And that was a result of OEM production schedules and lower volumes than we originally expected. And that clearly, as Matt mentioned, affected the fourth quarter as holiday schedules and Stellantis shutdown schedule as they repositioned their own production lines, did affect our sales.

Christian Zyla: That understood. Just last one from me. And maybe I might have missed this, but what is making the fastener business so strong? Can you just remind us, is there an end market mix, or is it more of a mix between OEM versus aftermarket? And then out of those buckets, where do you see the most strength in 2025? Thank you so much.

Matthew V. Crawford: You know, our supply technologies, which represents both the fastener manufacturing and the supply chain business, is really diverse. So the mix, I think, under the hood, so to speak, of what’s up and what’s down, it’s a difficult business to really predict at this point. We’re really diverse enough. We can get a good sense of where we’ll end up. It’s a little bit hard sometimes to figure out what’s going to happen by market. There’s a lot of volatility. I mean, we were very fortunate, I think, to position ourselves over the last four or five years strongly in aerospace and defense. To some extent, they saved our bacon a little bit last year. You’re definitely seeing some consumer-facing things and ag and some other areas that are extremely weak.

So, absolutely, I think there’s a lot going on. But I would just say that in the aggregate, our business increasingly beats to the drum of what you see across sort of industrial America. I think because of that, a really global industrial. When you have this varied a customer list as furniture to semiconductor tools to trucks to snowmobiles, you know, you’re bound to track, I think. In general, in aggregate sort of what’s going on in the economy generally.

Christian Zyla: Great. Thank you, guys.

Pat Fogarty: Thank you.

Operator: Thank you. We’ve reached the end of our question and answer session. I’d like to turn the floor back over for any further or closing comments.

Matthew V. Crawford: Great. Well, thank you for your great questions today. We are hard at work here. Again, I want to end with where I ended my initial comments. I want to thank all of the Park-Ohio associates and reiterate our team has never been stronger. Thank you to all of you.

Operator: Thank you. That does conclude today’s teleconference. You may disconnect your line at this time. And have a wonderful day. Thank you for your participation today.